A graduate of University College Dublin, Ó Dálaigh was a committed Fianna Fáil supporter who served on the party's National Executive in the 1930s, he became Ireland's youngest Attorney General in 1946 under TaoiseachÉamon de Valera, serving until 1948. Unsuccessful in Dáil Éireann and Seanad Éireann elections in 1948 and 1951, he was re-appointed as Attorney General in 1951 and in 1953 he was appointed as the youngest member of the Supreme Court by his mentor, de Valera. Less than a decade later, he became Chief Justice, when selected by then Taoiseach, Seán Lemass. He was a keen actor in his early years and became a close friend of actor Cyril Cusack. It is commonly stated that Ó Dálaigh and Cusack picketed the Dublin launch of Disney's Darby O'Gill and the Little People, for what they felt was the film's stereotyping of Irish people.[6] However, there is no contemporary reference of this ever occurring.[7]

In 1972, Taoiseach Jack Lynch suggested to the opposition parties that they agree to nominate Ó Dálaigh to become President of Ireland when President de Valera's last term ended in June of the following year. However, Fine Gael, which was confident that its prospective candidate, Tom O'Higgins, would win the 1973 presidential election (he had almost defeated de Valera in 1966) turned down the offer. However, Fianna Fáil's Erskine H. Childers went on to win the presidential election.

Ó Dálaigh tenure as president proved to be contentious. While popular with Irish language speakers and artists and respected by many Republicans, he had a strained relationship with the Coalition Government and many English language enthusiasts, particularly Conor Cruise O'Brien and with Liam Cosgrave.

His decision in 1976 to exercise his power to refer a bill to the Supreme Court to test its constitutionality brought him into conflict with the Fine Gael-Labour National Coalition. Following the assassination of the British Ambassador to Ireland, Christopher Ewart-Biggs, by the Provisional Irish Republican Army (IRA) on 23 July 1976 the government announced its intention to declare a state of emergency. Ó Dálaigh referred the resulting bill, the Emergency Powers Bill,[8] to the Supreme Court. When the court ruled that the bill was constitutional he signed the bill into law on 16 October 1976.[9] The same day an IRA bomb in Mountmellick killed Michael Clerkin, a member of the Garda Síochána, the country's police force.[10] Ó Dálaigh's actions were seen by government ministers to have contributed to the killing of this Garda. The following day Minister for Defence Paddy Donegan, on a visit to a barracks in Mullingar to open a canteen, attacked the President for sending the bill to the Supreme Court, calling him a "thundering disgrace"[11] (and not any vulgar expression speculated about since).[12] Ó Dálaigh's private papers show that he considered the relationship between the President (as Commander-in-Chief of the Defence Forces) and the Minister for Defence had been "irrevocably broken" by the comments of the Minister in front of the army Chief of Staff and other high-ranking officers.[13] Donegan offered his resignation but Taoiseach Liam Cosgrave refused to accept it. This proved the last straw for Ó Dálaigh, who believed that Cosgrave had additionally failed to meet his constitutional obligation to regularly brief the President.[13] He resigned on 22 October 1976, "to protect the dignity and independence of the presidency as an institution".[9] He was succeeded by Patrick Hillery.